Simple and better

House prices, sales up in August; institute cautious

After showing winter weakness in June and July, the latest Real Estate Institute housing sales figures and prices unambiguously portray a stronger market, with both prices and sales activity rising.

Tuesday, September 18th 2001, 8:51PM

by Jenny Ruth

Nevertheless,
institute president Rex Hadley struck a cautious note.

"The results from August are very pleasing,
but it’s just getting back to normal, bearing in mind that
2000 was the worst period in 10 years," Hadley told Good
Returns.

But the impact on the New Zealand economy
of last week’s terrorist attacks has yet to be seen. "I
do not believe there is a commentator in the world that can reliably
predict the long term effect of the New York tragedy," he
says.

Nevertheless, Hadley expects New Zealand’s
Reserve Bank to follow the lead of the US Federal Reserve in cutting
interest rates. The Fed cut its benchmark rate from 3.5% to 3%
overnight, New Zealand time.

"I think there’s room to move
considerably. I would be disappointed if it was anything less
that half a percentage point. There’s an argument that it
should be higher. Why are we a percentage point higher than Australia?"
Hadley says.

New Zealand’s central bank’s benchmark
rate is currently 5.75% while Australia’s is 4.75%.

The institute figures show the national
median house price rose to $176,000 in August from $170,00 in
both July and in August last year.

They show that the number of houses sold
nationally rose to 6,976 in August from 6,122 in July and from
5,489 in August last year. Hadley says 7,000 houses sold in a
month is normal.

The total value of sales rose to $1.45 billion
from $1.25 billion in July and $1.08 billion in August last year.

On a regional basis, five of the 11 regions
saw the August median price rise from July, five regions experienced
declines and one was unchanged. Compared with August last year,
the median price rose in all but two regions, Hawkes Bay and Otago.

Compared with July, activity rose in eight
of the regions and fell in three. Compared with August last year,
activity rose in all 11 regions.